Paul Krugman is not an economist – the evidence that shows this

Paul Krugman is often described as a winner of the Noble Prize for economics – Mr Noble set up no such prize, but let that slide (after all good people have sometimes been awarded this prize over the years). However, he is in fact not an economist at all – he is just someone who is called an “economist” because he has the position of “Professor of Economics” at a university (as if a job title describes knowledge).

Paul Krugman has for decades sneered at the idea that economics is about reason and logic – that it is (as the “Austrian School” claims) an a priori subject. On the contrary, Paul Krugman claims that economics is an empirical subject – all about understanding empirical evidence and making predictions.

The links given in this Cafe Hayek featured article show that Paul Krugman does not understand empirical evidence and makes predictions that are wildly wrong – i.e., by his own definition, he is not an economist.

Of course there is an alternative view:

This would be that Paul Krugman does have some grasp of economics – but chooses to support an ever more interventionist government for reasons of political ideology, in spite of the economic harm he knows such a line of policy will cause.

For example, Paul Krugman does not predict that the Obama “Stimulus” spending orgy will succeed (on top, please remember, of all the wild “Stimulus” spending by President Bush) – on the contrary Paul Krugman admits the “Stimulus” absurdity will fail – however he claims that this is because it is not big enough.

Almost a trillion Dollars is “not enough” – and however many trillions of Dollars were spent it would still be “not enough”. Any failure of statism is explained away as the result of there not being enough statism.

For as we know, economics is not an ethical stance, but the hardest of the social sciences.

And you can’t get an “ought” from an “is”.

Krugman may (and presumably does) choose to support policies knowing what the consequences will be, because he believes that those consequences are, if not desirable, then at least justified. Omlettes etc.

Wearing one hat, he is one of the brightest and best economists of his generation, and most of the time has been a consistent supporter of free trade.

Wearing another hat, he is a liberal shill.

There is no contradiction because one is an “is” question, the other is an “ought” question.

Krugman is an economist, and even economists that disagree with him on everything else seem to admit he deserved it for his work on international trade.

What Krugman is not is an economist in his writings on domestic policy or politics; in that context he’s a partisan hack.

He’s an economist, and has proven it – and that makes his butchery of economics in the service of a political agenda even more dismaying.

He ought to know better.

(I say ought rather than does because domestic monetary policy and the like really is such a different area than international trade that he might well just be conveniently ignorant on the subject.

Much as someone who earned a Nobel in theoretical physics in one very specialized area might not know jack-all about another area, say.

The main difference is the physicists usually know they don’t know what they’re talking about in other areas and shut up about them.

Krugman can be brilliant on international trade studies and completely, mind-numbingly stupid on Keynesian-style stimulus, and still deserve his Nobel, since it was only for the work it was for; the Prizes are for specific work, not for Being Generally Awesome, after all.)

Once upon a time, a man was interviewing for a job. It came down to three people, a mathematician, an accountant and an economist. All were, all told, excellent candidates, so the interviewer decided to bowl a googly as it were with one final question to see how the candidates did.

The mathematician was called first.

“What’s two plus two?” inquired the interviewer.
“Four.” replied the mathematician, confidently.
“Really?”, asked the interviewer.
“Well, given that we are talking about the set of positive real integers, yes”.

OK. so he calls in the accountant, and asks the same question.
“four”
“Really?”
“Well, it’s a matter of interpretation, but , more or less, yes”.

He calls in the economist and asks him the same question.
The economist looks furtive. He goes to the door. Checks it’s locked. Pulls down the blinds. Does a quick sweep of the room for bugs, then leans over conspiratorially and whispers to the interviewer “what would you like the answer to be?”

(Disclaimer, I am an economist. I think some of Krugman’s work on trade is really good. But I suspect that much of the macroeconomic theories about the stimulus, one way or another, are about what we’d like the answer to be rather than illuminating. I wish a) I could call us a profession so that b) I could say that the profession should be more honest and say ‘we really don’t know but our guesses are X,Y and Z because P,Q and R’. )

Fred: How many stimulus jobs have we created?CBO: Just a second (runs computer program model) 2,343,458 jobs.Fred: Did this scan a detailed database of collected information?CBO: No. It always says that.

Doug Elmendorf is Director of the Congressional Budget Office (CBO). He basically agrees with me, that their employment model simply spits out pre-determined numbers, regardless of what happens in the real economy. The CBO recently estimated that so-called stimulus spending generated jobs and growth.

Someone asked if the CBO model would be unable to detect whether the stimulus failed. After hemming, hawing, and a follow-up question, he confessed “that’s right”.

(See this at 39:00 on the C-Span video at the link.

AMG: The US economy is being analyzed by CBO models that are entirely theoretical and are not compared to the reality that they are supposed to predict. It is the CBO that “scores” Congressional legislation, telling us what it will cost and how much we will “reduce the deficit”.

What’s an economist ? How do you define it ?
I have no idea.
Therefore I can’t tell if Krugman is one.
I’m mostly tempted to call Krugman an idiot. A very sophisticated and erudite idiot, not an ordinary one. That is because I believe he believes what he writes, i.e. he’s not dishonest.

What you say about the CBO is sadly typical of the “mathematical models” used by so many supposedly empirical and “scientfic” economists.

They show what their creators wish them to show – they do not tend to refute the theories of their creators.

Nor is this new – Sir William Petty (back in the 1600’s) was playing these games in the days when “computer” still meant “person who computes”.

“Science is prediction” indeed.

Jacob – I do not hold that economics should use “the” scientific method of physics (I hold that economics is a different sort of subject – that truth can be found in it, but not in the same way that physics tries to find truth), but these people do ape the methods of physics.

They claim that have theories and “test” them against “empirical data” – and they do nothing of the kind, the game is rigged.

The problem with economists is that in any debate, about any subject you find economists on both sides of the divide. So what does economics teach ?
Economics would be useful if it could tell between A and B, and all economists agreed, by that the “science” of economics unequivocally says that A is true, not B.
But, if there is no such case, if on every A and B, some economists say A, others B – then there is no such thing as the “science” of economy.

Agreed, Jacob: economics is not a “science”. It is a branch of human psychology, and this would be a better world if that fact were recognized and the subject moved from the math department into the social sciences department where it belongs.

Economics (or “political economy”, as it was once and more appropriately called) ran off the rails when they tried to quantify it and turn it into something which it is not and can never be. Supply-demand curves and the like are useful theoretical constructs, helpful for grasping fundamental concepts, but they have no real predictive value. Expanding them into complicated econometric models full of complex formulas and greek letters adds nothing; these models are creatures of their own simplifying (and simplistic) assumptions, and are no more predictive than the rightly-villified global warming models.

macro economics n. The study of overall statistics about income, debt, production, and employment. You would think that statistics are dull, but macro economics is a center of intellectual ferment. Motto: “We just don’t know, but we are willing to guess”. Critics say that it is history confused by mathematics, or mathematics splattered by history.

Macro economics is noted for the gigantic cost of the occasional government experiments carried out with fanfare in times of crisis. Experiments in good times are never advertised or acknowledged, for fear of being held responsible for yet again ruining a good thing.

micro economics n.
The study of how people exchange money to trade goods and services, organize businesses, and assign value. Critics say this is sociology spoiled by mathematics. Most knowledge about rational economic interaction was discovered by 1950. It remains to find rational people to apply it to.

Economics is like physics. Wait, let me explain. In economics there are a number of different “schools” of economics. Here’s just a few: Monetarists, Mercantilists, Physiocrats, Rational Expectations School, Classical School, Marginalist School, Marxist School, Institutionalist School, Keynesian School, Austrian School, Rational Expectations. They hold only one thing in common, that anyone under the influence of an opposing School is worthless. In other words, much like physics, the search for a Unified Field Theory of economics goes on. Krugman is, as a NYT op-ed writer, largely a Neo-Keynesian. Neo is the proper term because he not only supports but pumps up some of Keynes’ loopiest ideas and buries his few good ones. But his major sin is simple inconsistency. On the one hand he will accuse Bush (R) of “running up outrageous and irresponsible deficits” and a few years later accuse Obama (D) of not doing enough because his budget deficits are too small. Apparently, he now believes his first loyalty is to the ideology of the NYT editorial board and owners, rather that the objective application of any knowledge of economics he might still retain.

I suppose that, in a sence, economics is like a science in that its predictions are falsifiable. However, unlike with a real science, those theories which are proven false aren’t abandoned, but rather are defended even more strongly.

If that was what he had done, then you would be correct. The truth is, naturally, much more complicated. Here’s his fun list of things you’d believe if you’d taken people at the WSJ complaining about his positions…

In 2006 you would have believed that there was no housing bubble.

In 2007 you would have believed that the troubles of subprime couldn’t possibly spread to the financial system as a whole.

In 2008 you would have believed that we weren’t in a recession — and that the failure of Lehman was unlikely to have bad consequences for the real economy.

In 2009 you would have believed that high inflation was just around the corner.

At the beginning of 2010 you would have believed that sky-high interest rates were just around the corner.

It was the Austrian School (and some Chicago School people such as Thomas Sowell) who predicted the crises and what caused it – Paul Krugman was all over the place (so let us not rewrite history).

As for the WSJ – yes most (not all) of the people there mocked the Austrian School economists. And they mocked investors in the market (specifically Jim Rogers, Peter Schiff, and James Grant) who were saying much the same thing.

Actually Peter Schiff (the one I know most about of the three) underestimated the long term problem – as he assumed that the Feds would react rationally when the crash came (a rash assumption).

Instead the Feds have desperatly tried to keep the bubbles inflated (by any means). Thus dooming the economy – as future years will show.

Still Schiff (unlike Rogers) did not give up on the United States – when polticians did not react with any rationality he even tried to go to Washington himself.

Only to find that Republicans would rather have a entertainment promoter in the Senate rather than one of the leading financial experts in the modern world.

Talk about the Romans and their “bread and games” – time to stock up on canned goods (and firearms and ammunition to defend it).

Or better (for people with marketable skills) time to get out of the United States.

For a moment I thought Paul Kruman meant government debt, but no (silly me) he means private debt.

There is a sort of logic in calling for a government default – why shoud taxpayers be forced to pay for things they OPPOSED (such as the “stimulus” spending debt of both Bush and Obama). One can argue about it till the cows come home (and it is most likely crackbrained) – but there is an argument there.

But that is not what Kruman is saying – he is saying that people who voluntarily agreed to take out a home loan (because they wanted a house they could not afford), or run up a credit card bill (because there was all that nice stuff they wanted to buy) should be allowed (in various clever ways) to cheat their creditors.

First this is NOT “how World War II cured the depression” (see Robert Higgs on these matters). Krugman is a fool (at best) on this matter – as he is on all matters.

But there is a more important point – some people might consider my comment above about the United States to be “extreme” – but consider the following…

Paul Krugman is not some nut in a looney bin who is listened to by nobody – he is considered a leading “intellectual” who words are in the “newspaper of record” and adivsers the American government (although he says they do not go far enough in putting his ravings into practice).

Do you think that would happen in Germany or many other nations I could name.

“Let people default on their debts” – how would that go down in Germany, or Italy or…….

That is why the situation in the United States may be more serious (not less serious) than it is in Europe.

Europeans might give Krugman a prize – but no European government would take any notice of his policy advice. That is (for all his claims to the contrary) not true in the United States.

In the United Startes Barack Obama may know that all this spend and default and…… “demand” stuff is nonsense (I believe he does know it is nonsense), but he is only too happy to have the excuse to Cloward and Piven the United States (the thing of dreamed of doing whilst going to all those Marxist conferences whilst a post grad in New York – and in the hards days of work in Chicago).

Maurice Dobb and Pierro Straffa taught that nonMarxist Keynesians were useful idiots – whose doctrines could be used to destroy “capitialism” and bring about the victory of Marxism.

And Paul Krugman is a classic case of such a useful idiot.

Whilst such people as him are considered important and respected intellectuals – the very continued existance of the United States is in danger.

Yes the influence of people like Paul Krugman is a “clear and present danger”, as is (even more so) having people like Barack Obama in powerful positions – i.e. people with the deliberate intent to use any excuse to follow policies to destroy the “capitalist” United States.

Serious thought (and action) is needed – by people vastly more important than any of us here.

Krugman was awarded a B.A. in Economics from Yale, and a Ph.D. in economics from MIT. He won the John Bates Clark Medal, awarded by the American Economic Association to “that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge.” And, of course, he won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel–in other wrods, he is a Nobel Laureate. So the answer is, yes, he is an economist, one of the most distignusihed of our age.

Krugman was awarded a B.A. in Economics from Yale, and a Ph.D. in economics from MIT. He won the John Bates Clark Medal, awarded by the American Economic Association to “that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge.” And, of course, he won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel–in other wrods, he is a Nobel Laureate. So the answer is, yes, he is an economist, one of the most distignusihed of our age.

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